WASDE Cotton: Higher U.S. Production, Exports, Ending Stocks

Led by higher production, the U.S. cotton forecasts for 2019/20 includes higher exports and ending stocks. Production is forecast at 22.0 million bales, based on 13.8 million planted acres as indicated in the NASS March Prospective Plantings report. While planted area is expected lower in 2019/20, increased precipitation to date in the Southwest suggests abandonment will fall from 2018/19’s above-average level and harvested area will rise. With harvested area up, production is projected 20 percent higher than in 2018/19.

Domestic mill use is projected unchanged at 3.1 million bales, while exports are expected to rise 15 percent to 17.0 million. At 6.4 million bales, 2019/20 ending stocks are projected 1.8 million higher than the year before, equivalent to 32 percent of use. This would be the highest U.S. stocks-to-use ratio since 2008/09. The marketing year price received by producers is forecast to average 65 cents per pound, 5 cents lower than in 2018/19.

For 2018/19, U.S. cotton production is reduced marginally from last month. The export forecast is reduced 250,000 bales to 14.75 million bales as the expected U.S. share of world trade declines, and endings stocks are increased about 200,000 bales.

The world 2019/20 cotton projections show a small decline in stocks and rebounding production and consumption. With global harvested area for cotton projected at its highest in 7 years, and yields rebounding in major producing countries, production is expected to rise 7.0 million bales to a near-record 125.5 million. U.S. production is expected to rise the most, closely followed by India, while lower crops are foreseen for Australia and Brazil, and China’s crop is projected unchanged.

World consumption is expected to rise 2.6 percent to 125.9 million bales, slightly above the previous consumption record realized in 2006/07. Projected world trade is raised from 2018/19 as import-oriented consumers such as Bangladesh and Vietnam are accounting for a larger share of world consumption, and China’s imports rise.

Global ending stocks are projected down 0.8 million this year, to 75.7 million bales, 60 percent of consumption. An even larger decline is expected in China’s stocks, and stocks outside of China are expected to rebound from their decline in 2018/19 to a new record level.

For 2018/19, both world production and consumption is decreased about 500,000 bales from last month, leaving ending stocks virtually unchanged. Production is lower in India, more than offsetting an increase in Brazil. Use is reduced in Indonesia and Vietnam.